Hearing aims for "balance" on natural gas severance tax proposal

WILKES-BARRE (WOLF) -- "Whatever you take out of the earth, you're gonna pay a percent per thousand cubic feet," says PA House Representative Eddie Pashinski (D-Luzerne).

Taxation. That's what Rep. Pashinski and the House Democratic Policy Committee are hoping for on Marcellus Shale natural gas. Pashinski says Pennsylvania is lucky to have an abundance of the resource, but that having it without a severance tax, a tax placed on the extraction, isn't quite fair.

"Every one of the constituents go to work every day, they do their job, and they pay taxes every day so that we can have roads and infrastructure and police protection. That's what makes America great. We all pay our fair share," says Rep. Pashinski.

His goal is to find a balanced approach.

"It's incumbent upon all of us to sit down and work out a deal that allows the business to be able to profit, allows them to produce the natural gas at a lower rate for our customers, for the people of Pennsylvania, provide the jobs, but also pay their fair share," he says.

While every state has a unique tax code, Pennsylvania is the only state in the country without a severance tax for drilling natural gas. But while it's the only state without a severance tax, it's the only state with an impact fee, something imposed in a large amount to companies up front, and decreases over the years. Money from this fee goes to impact local governments and statewide programs, and has accrued an estimated $1 billion for the Commonwealth since 2012, according to Frank Joanlane, President of Borton Lawson Engineering.

Joanlanne doesn't believe that prosperity through taxation works, and that a severance tax in addition to the impact fee could potentially hurt the state.

"Let's make sure that we don't do anything to curtail an industry that has created a lot of jobs, created a lot of opportunities that otherwise would not be created," he said.

He raised concerns that a severance tax could cause natural gas companies to leave.

"They're very mobile with their capital, they're very mobile with their investments, and we want those investments here," he said.

He also says he can't predict where the end of this conversation will land, or what the ultimate impact will be.